Friday, December 15, 2006

Marc says asset prices have been going up due to easy money policies worldwide. He also feels that any further liquidity expansion from the U.S. will result in a continued increase in asset prices against a backdrop of continuing dollar weakness. As Faber points out, the S&P 500 has marched higher this year (up 13 percent in dollar terms), but is up only 2 percent in terms of Euros. In other words, "the strength in the S&P has been offset by dollar weakness". He sees relative value in the stock markets of Asia, giving specific mention to Thailand (where the currency has strengthened against the dollar) and underperformer Japan. While Faber says he is currently taking advantage of the opportunity to sell assets, he feels that anyone who remains bullish should focus on Asian equity markets.